Federal Government Should Use Its Purchasing Power on Drugs, Report Says

Wednesday, December 20, 2017

Alex Azar, the nominee for head of the Health and Human Services Department, met with a Senate committee in November to discuss high drug prices. “I believe I can hit the ground running to work with you and others to identify solutions here,” Mr. Azar told the committee. “I think we need to look at why Americans are paying more than those in Europe and Japan.”

The committee used some of the recommendations from a detailed report from the National Academies of Sciences, Engineering and Medicine. The strategies for lowering U.S. drug prices laid out in the report include: letting federal agencies negotiate better prices with producers and suppliers of medicines; forcing companies and insurers to publish prices for drugs; limiting out-of-pocket prescription costs; and limiting direct-to-consumer advertising.

Some advocacy groups have called for allowing Americans to import cheaper drugs from other countries, but the committee balked at that recommendation. “Even if importation or reimportation, or both, were allowed, it is not clear how much they would reduce drug costs for U.S. consumers,” the committee said.

However, the committee supported prohibiting companies from using patent laws and other protections to keep artificial monopolies on drugs. It also agreed that insurance company co-pays and cost-sharing requirements should be limited as they prevent patients from taking the drugs they need.

Two members of the committee, both drug company executives, disagreed with many of the recommendations, citing the importance of maintaining incentives for companies to develop drugs.

“We believe that the committee’s recommendations, if actually implemented, will lead to unintended consequences that will damage the health of people in the United States and damage the health of an industry whose innovations are essential to addressing unmet medical needs in the future,” Michael Rosenblatt, chief medical officer at Merck and the late Henri Termeer, former CEO of Genzyme Corp., wrote in a dissent.